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TUPE liabilities on change of contractor

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12 May 2010

Taking over a construction or civil engineering contract may be good for business but it brings with it the now familiar headache of employee liabilities under TUPE. These can range from undisclosed bonuses, arrears of pay claims, unfair dismissals and discrimination claims, and in some cases, where the outgoing contractor fails to inform and consult as required by TUPE, awards of up to three months’ pay for all affected employees. None of this is helped by the lack of clarity about when TUPE applies.

In the words of a former President of the Employment Appeal Tribunal (EAT), it is “something like a game of hazard … in which the stakes increase dramatically according to the numbers involved, … requiring intense concentration … in which no one does half so well as the lawyers who have become indispensable as its croupiers.” His words refer to different employment law provisions, but are equally applicable to TUPE.

The following arrangement is common place in the civil engineering industry:

Work for a utility company or contractor, installing cables or pipes in a particular area is carried out by sub-contractor A

The contract with sub-contractor A expires on, say, 1 April 2010 and all new assignments arising after that date are given to sub-contractor B. However, sub-contractor A completes all work in progress, retaining their employees for that purpose and making them redundant in stages as and when work is completed.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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